Information on Merchant Accounts,
Ecommerce and Credit Card Processing

March 15th, 2006 by Jamie Estep

TMF’d – What to do if you are are placed on the terminated merchant ‘match’ file…

Filed in: Ecommerce, Guides, Merchant Accounts, My Favorite Posts | 19 comments

I wish I could say that every business that is placed on a terminated merchants file deserves it. Unfortunately I would be absolutely lying to say so.

TMF Match FileThe Terminated Merchants File (TMF) or match file is basically a list of merchants that have had their merchant accounts closed down by their processing bank on negative terms. This list, which resembles McCarthy’s black list during the cold war, is a stop-all flag that credit card processing companies in America abide by. If you are placed on the match file, you, any partner of your business, your business itself, and possibly anyone at your address can not sign up for a merchant account with a US based processing bank. Processing companies take the match file very seriously.

How to get on the list:
When a merchant ends their contract with a merchant provider in a negative way, their name can be placed on this list. Unfortunately, not all business placed on the list even know they are on it until they try to get setup processing credit cards with another company. The rules to place a merchant on the list are fairly limited, but seem often abused.

The easiest way to get on the list is to close your contract with a merchant provider and not pay your final bill. Failing to fulfill your contract is almost a guarantee that you will get put on the match file. Your final bill includes any processing costs that you owe, but also includes any monthly, yearly, or termination fees that were specified on your merchant contract. You are also liable for 6 months past the settlement date of the final transaction that was processed on your merchant account. The settlement date is defined as the date that the service or merchandise was fully delivered to and accepted by the customer. Basically, if you sold someone a 1 year magazine subscription, you are liable 6 months after they get their last issue.

Merchants are normally placed on the TMF file for failing to pay their final bill, but can also be placed on it for reasons that can be out of their control. High chargeback ratios, processing fraudulent transactions and breaking a merchant account contract are other common reasons for being placed on the TMF. Running your own credit card through your own merchant account can also get your account closed and TMF’d.

What to do to get off the file:
The only company in the world that can get you off the TMF, is the company that put you on it. It does not matter who you talk to, what they promise, who they are, or anything else, it always comes down to the company that put you on it. Business normally learn that they are on the TMF when they try to open a merchant account with another company.

The company that puts a merchant on the TMF is the processor that is taking on the risk of allowing the business to process with them. These are often the back end companies that you may have never had any personal contact with. FDMS, Nova, Global, and others are back-end processors. Merchant Service Providers and resellers are not normally the companies that can put a merchant on the TMF, unless they are taking on the risk of your credit card processing, so calling them may have no effect, but regardless, the company you signed up your merchant account with is who you should contact first.

After you find that you are placed on the TMF, assuming that you don’t know why you’re on the list, you should first call your former merchant account provider. You are going to be inevitable led on a wild goose chase of phone tag with different departments in the company. Hopefully you can reach someone who can give you answers within a person or two. You may finally be referred to the processing bank itself, but in either case, after some diligent calling you should be able to track down someone who can inform you of your situation. The most important thing to remember right now is to remain calm and courteous to every person you talk to, no matter how upset or angry you may be. Yelling and acting aggressively toward people at this state is only going to create problems. It is understandable that you are frustrated with the situation, but most of the people you talk to do not have the ability to directly change things. Once you reach someone that can explain your situation to you, possibly in the risk department, they should be able to tell you why you are on the match file and what you need to do to get off the file. At this point make sure you get a more direct phone number for someone that you can correspond with about the situation.

Depending on why you are on the TMF, it can be easy to impossible to get off the TMF. If you are on it for committing fraud yourself through your own merchant account, don’t count on ever getting off. Processors do not like fraud in any way, and if you as a business owner were the cause of it, they will not ever want to provide services to you again.

If a business was placed on the match file for a high chargeback ratio, time is normally the only thing that will get the business off. The processor needs to know that they aren’t going to get stuck with any unanswered bills from the merchant’s former customer’s Chargebacks.

If you didn’t pay your final bill, it may just be a matter of making good on your debt with your former processor. I have seen this as low as a few dollars, and the merchant was removed about a week after they made payment.

Unfortunately the majority of the time it is not that simple to get off the match file. It normally takes several weeks to get off the match file. Sometimes it takes negotiations to get charges cleared up, or fees removed. At this point every case is unique. If after a few weeks you are not making any headway, you may need to consult a lawyer. Processors normally use a system called arbitration to avoid taking individual cases to court. It is cheaper than going to a court, and the results are often better for both parties.

It is a good idea to have a clear understand the rules of Visa and MasterCard. Knowing about the match file, and the general regulations of Visa and MasterCard can help a lot when trying to get off of it.

If you need legal assistance in getting of the Match file, you will unquestionably need a lawyer that has experience in bankcard law. Here are a few resources to help you if you find yourself in that situation. I do not personally have experience with these companies but several have been recommended to me and these seem reputable. Use your own judgement before choosing an attorney.

How to stay off the match file:
Signing up with the wrong processor greatly increases a businesses chance to ever get put on a match file, especially for incidental reasons. I personally recommend signing up for a merchant account with FDMS or Nova as the back end processor, as businesses with these companies are much less likely to experience problems with the match file. In any case, make sure the provisions of the merchant account application, particularly the contract period and any associated termination fees are well understood before signing.

Related Posts:
Why are some companies offering free credit card terminals with their merchant accounts?
What Does All This Mean? – Merchant Account Fees
Credit Card Processing No No’s
Avoiding a Bad Merchant Service Provider

March 14th, 2006 by Jamie Estep

Online Credit Card Fraud Detection Systems

Filed in: Ecommerce, Merchant Accounts, My Favorite Posts | 3 comments

Credit card fraud is a menacing problem for everyone. It helps to drive businesses prices up and drives up the price to process credit cards.

Credit Card Fraud PreventionCompanies have responded to businesses needs and have created fraud detection and prevention systems. These systems are used in conjunction with a payment gateway, will help businesses recognize and prevent fraud on their websites. Visa and MasterCard have also created their own prevention systems that enable card holders to create a secret password, similar to a PIN number. The Visa and MasterCard systems called Verified by Visa and MasterCard Secure code are integrated into a website to provide a secondary checkout option for cardholders who are signed up for these systems.

How fraud detection works:
There are two types of fraud detection systems. The first is tied into a merchant’s payment gateway and works in real time to prevent and detect fraud. The second is a 3rd party application where card numbers can be entered and the system generates a score based on a number of fraud qualifying factors.

Real-Time Fraud Prevention:
Fraud detection systems monitor credit card transactions that are processed through a businesses payment gateway, and look for certain signs that would indicate fraud. These systems check for anything from numerous transactions being entered from a single IP address, to advanced card number algorithm abnormalities. Real time systems can be setup to either flag a transaction for later review or can be setup to automatically decline a transaction.

3rd Party Systems:
3rd party systems are normally not tied directly into a merchant’s payment gateway, but can still be very effective in detecting fraud. 3rd party systems normally check for IP address and domain occurrences, bank information, area code and zip code occurrences, shipping and billing address occurrences, proxy web browsing, and many others. The system will generate a fraud score based on all of the information provided with each transaction. The higher the fraud score, the more likely the transaction is to be fraudulent. Merchants can batch process all of their transactions before they are shipped, and then determine whether to ship certain items based on the fraud score.

Who needs a fraud prevention system?
Fraud prevention is not needed for every business. For many, it would be simply a waste of money. Businesses that have a history of being targeted with credit card fraud should look into a fraud prevention system. Businesses that sell high dollar items online should also look into fraud prevention, as the loss of a single item can be very significant. All businesses should review their current practives to ensure that they are doing everything they can including requiring AVS and CVV for the transactions, before they look into a fraud prevention system.

What does fraud prevention cost?
Fraud prevention systems vary in cost. Some charge on a per transaction basis, some charge per month, and some charge a flat rate for a certain number of transactions. Rates vary anywhere from about $.005 per transaction to several hundred or thousand dollar per month. The cost is determined by the volume of transaction checked each month, the type of prevention system (3rd party or real-time), and the complexity of the system.

Where can I get a fraud prevention system?
Most payment gateways now offer real time fraud prevention systems. If you are using, Verisign, or Network Merchants, you have the option of using their integrated real-time prevention and detection systems. – Fraud Detection Suite
Verisign – Fraud Protection Services
Network Merchants – iSpyFraud Protection

For businesses looking for 3rd party fraud prevention and detection systems there are a variety or 3rd party systems for this purpose. Search on the internet for fraud prevention or fraud detection systems. Here is a list of a few of the services that are available.

Fractals –
MaxMind –
ClearCommerce –

Fraud detection or prevention systems are by no means a perfect solution for preventing fraud, but they can help to reduct the amount of fraud that is processed through a website. With human review and fraud detection, it is still not possible to completely eliminate fraud for many businesses.

Related Blog Posts:
What does a fraudulent transaction look like?

March 10th, 2006 by Jamie Estep

The costs of not using AVS (Address Verification System)!

Filed in: Ecommerce, Merchant Accounts | 5 comments

AVS, short for ‘Address Verification System’ is a simple verification tool businesses use, that verifies the billing address of the credit card. AVS can verify the billing ZIP code and / or the street address of the card. AVS currently is only available for cardholders in the US.

When a business keys a credit card into their terminal vs. swiping it, their terminal prompts them for an address or zip code, and this is the AVS system. When a merchant uses a online payment gateway to key in transactions, the gateway processes with the AVS system as long as an address and ZIP code are entered along with the transaction information.

AVS costs a little extra:
Normally AVS has an additional fee with it when a transaction is processed using the AVS system. This fee is normally $.05 – $.07 per each AVS transaction, and is charged in addition to the standard transaction fee for processing the credit card.

Many business owners see this additional fee, and not knowing the effects of not using it, decide to not use it so that they can save this additional 5 cents. What they don’t know and may never realize is that if AVS is not used on a keyed transaction, that transaction will downgrade to non-qualified. A non-qualified transaction is the lowest qualification level for a transaction, and has a much higher processing rate than with a qualified or mid-qualified transaction. Retail businesses will automatically downgrade to mid-qualified when keying in transactions, but will also downgrade to non-qualified when AVS is not used.

How much does it cost?
Depending on your merchant contract, a non-qualified transaction can cost as much as 2% and $.50 or more extra per transaction. What this can mean is that if you have a keyed merchant account setup at 2.3% with a transaction fee of $.25 per transaction, the downgrade to non-qualified can increase this to 4.3% and a $.75 transaction fee. Your costs to process the transaction nearly doubled, because of the desire to save a nickel. Not all merchant account downgrade fees are this bad, but they all are significantly more than the $.05 for keying in a transaction.

Use AVS!
For keyed merchants, AVS is required and should be used on every transaction. In addition to your transactions being more expensive by not using AVS, AVS is a very good fraud prevention system. For retail merchants, enter your customers billing ZIP code when you have to key in that occasional transaction.

The $.05 is much cheaper than the additional processing fee you will pay for downgrading to non-qualified.

March 9th, 2006 by Jamie Estep

Enter your name exactly as it appears on your credit card… Why?

Filed in: Ecommerce, Merchant Accounts, My Favorite Posts |

Being in the credit card processing business for several years, there is one thing that has always bothered me. The lack of the ability to verify the name of a person placing an order over a website or over the phone.

Lets just make a scenario to show exactly what I am referring to. Lets take John, a married middle age business man with 2 teenage boys. One day John’s oldest boy James, decides to ‘borrow’ John’s credit card to place an order online without asking.

James goes online to an ecommerce website, finds the product he was looking for. James is shopping at a large internet retailer that uses the latest fraud detection and prevention technologies. When he goes to fill out the customer information, he puts his name and address in both the shipping and billing address fields, as he doesn’t want anyone to know that he ordered with his dad’s credit card. After everything is filled out, he presses the place order button. 3 days later he receives the package he ordered.

What exactly is the problem here?
James just placed a credit card order with someone else’s credit card in his own name. To make matters worse, he probably could have entered any address within the same zip code as the card holder’s billing address.

To test this system myself
I placed an order through several websites using my address but using my father’s card. In the billing field there is small text that states “Enter card holder’s name exactly as it appears on the card”. Needless to say, I entered my own name instead. We live in the same zip code, and just as I thought, every transaction processed perfectly, and the items were delivered to me at my home address. The card might as well have been mine, because the business obviously cant tell the difference. To further add to the problem, I added one of his cards to my paypal account. Paypal is a little better and I did have to enter his street address, as paypal uses the street address and the zip code to validate a credit card’s owner, but again, no name verification. On paypal, since my own credit card is attached to my billing address, I can still ship confirmed to my address using his card.

I made sure to shop only at websites that had the words, enter name exactly as it appears on your credit card.

If John sees his statement and doesn’t recognize that $400 charge, he can request a chargeback from his bank. When the company that shipped the product shows his bank that the order was not placed by John, they lose the chargeback. It doesn’t even matter if the product was shipped to John’s house.

In a nutshell:

What is the point of having a field asking, ‘please enter your name exactly as it appears on your card’?

The complete lack of an electronic name verification is a gaping hole in credit card security. If there were name verification, I can see potential problems that could arise if someone enters their own name incorrectly. But, if every form I fill out asks me to enter the name exactly as it appears on the card, there shouldn’t be a problem. If I have the card in my hand, I can copy the name right off the card.

Additional programs like Verified by Visa and MasterCard secure code are great concepts which greatly reduce any chance of fraud, but are expensive and difficult to implement. Small to medium sized ecommerce websites are years away for having easy access to these tools.

AVS (Address Verification):
Address verification should be used on every transaction that is processed through a website or over the phone. Address verification can either check the zip code of the card holder, or can check the zip code and the street address of the card holder. While checking both the street address and zip code better ensures that actual street address of the card holder is being used. But, in using street and zip address verification, I have received a huge number of declines due to the street address field being very temperamental.

As long as the address verification data passes when a transaction is processed, it doesn’t matter who’s name appears on the card. The business could be shipping to Mickey Mouse, but as long as that address matches, everything is fine. Until banks come up with a universally electronic system to verify names, like AVS, the risk of this type of fraud will not go away. While it is not considered a major source of fraud, it is not something that should be overlooked, especially since the liability always falls in the hands of the businesses accepting credit cards.

March 8th, 2006 by Jamie Estep

Debit card thieves get around PIN obstacle…

Filed in: Industry News |

With consumers around the country reporting mysterious fraudulent account withdrawals, and multiple banks announcing problems with stolen account information, it appears thieves have unleashed a powerful new way to steal money from cash machines.

March 8th, 2006 by Jamie Estep

Surprise: Stores can’t set a credit card minimum!

Filed in: Industry News |

This is a great article for consumers and businesses alike about merchants charging to accept credit cards, and what consumers can do if they get upset about a business doing it.

We all have to pop into a convenience store every now and again to get a carton of milk or some coffee. But some readers are wondering can such stores charge a fee to customers who use their debit or credit cards for such small purchases.

March 2nd, 2006 by Jamie Estep

Creating additional revenue as a Merchant Account Agent

Filed in: Credit Card Equipment, Ecommerce, Guides, Merchant Accounts |

Merchant Account Agents:
A merchant account agent program is a referral partnership between a merchant service providing company and another company or individual. The merchant service provider pays the referring company a fee for each business that is referred for a merchant account. The payment can be a residual split or can be an account buyout program. Merchant account agents with existing, well founded, business relationships can create substantial revenue with minimal effort being an agent. Accountants, Consultants, Financial Services, Web Services and many other business types can greatly benefit from a merchant account agent program, as many of their customers are looking for merchant services already.

Two options for agents referring businesses
When an agent enters into a contract with a merchant service provider, they agree upon the payout method. A residual split option is by far the most common agreement. A residual split means that the provider and the referrer split revenue collected from the processing of transactions by the referred business. The split can be anything, as negotiated between the referrer and the provider, but a 50/50 split is the most common. It is common for an upfront cash bonus in addition to the split, for many providers. Residual payments normally last as long as the referred business is processing, so they can provide a great lifetime value for businesses looking to form long term relationships.

Upfront buyout programs are also available but much less common than residual splitting programs. An upfront buyout is a lump sum that the referrer receives for referring a business. Since their is no residual payments like the residual split program, upfront programs are better for businesses looking to get paid upfront and not ever have to worry about that business again.

The company you refer to is a reflection of yourself
When you refer a business for a merchant account, you want to ensure that they will be taken care of and treated in a way that reflects positively on your own business. Very often, merchant account agents refer their existing contacts to their partnered merchant service provider. To avoid potential repercussions from referring to a company that provides a poor experience, you need to make absolutely sure that you are referring to an honest company. Check BBB reports, and look for consumer complaints about the company that you are looking to form a partnership with. Also, make sure the company you are referring to has been in business for several years. New businesses come and go, so you should make sure that the company has a solid foundation, and positive reviews from customers.

Another often overlooked aspect of referring to a merchant service provider, is what type of businesses the provider accepts. Many providers are restricted in the types of businesses they can accept. A good provider is registered to several processing banks and can normally provide services to all but a few select rare business types.

Customer service is a huge factor in determining who to refer to. Your customers need great service and support, and you need support when you require it. Only partner with a company that gives you a direct contact that can help you and answer any questions that you have. You are a person and not a number, and your partnered merchant service provider should feel the same way.

Lastly, equipment pricing should be a major concern for you and your customers. Equipment can be very reasonably priced, but due to huge markups, often costs businesses and agents 3 or 4 times what it is actually worth. Try to find a company that will provide you with wholesale, or near wholesale pricing on equipment. Be vary cautious of free credit card terminal agent programs. From what I have investigated, they often come with many strings attached.

Not all agent programs are equal
With every industry there are good companies and there are less good companies. Becoming an agent for a merchant service provider requires a trust and commitment on your part, and you need to be sure that the company you are working with is the best match for you. Many providers with agent programs have huge payout or residual claims, but when payday comes around, their promises fall far short.

With any offer, if it sounds too good to be true, it most likely is. Also, make sure to read the fine print. I have seen free terminal programs for agents, but after reading the contract, I found that the terminal is free to the customer, but the cost is deducted from the agent’s residuals. I have also seen upfront buyout programs that guarantee $1000 or more per merchant account, but if the business what not active for two years, the agent had to pay back the full amount of the referral fee. The point is, make sure you know what you are getting into, and who you are getting into it with, before you ever sign the contract.

Merchant Account Agent Program Question Checklist
I made up a short series of questions that you should absolutely know and be comfortable with before entering in a partnership with a merchant service provider.

Questions for them:

  • How long has the merchant service provider been in business?
  • What processing banks / processors is the company registered to?
  • What types of businesses does the company provide to and do they accept startup internet or MOTO (Mail Order Telephone Order) businesses?
  • What residual split and buyout option are available?
  • How often are residuals paid, and are they lifetime?
  • What are the prices and customers prices on processing equipment?
  • Does the company deploy the equipment themselves?
  • What payment gateway options are available for internet merchants?
  • What support do I have and what support do my customers have?
  • How competitive and what are the rates that are being offered?
  • What are all of the extra fees with each merchant account (SETUP, APPLICATION, MONTHLY, YEARLY, TERMINATION, ANY OTHER MISCELLANEOUS FEE)

Questions for you:

  • Do you have an actual person you can contact, phone, email, etc.?
  • Is the processing equipment at or near wholesale?
  • Does the company support all types of businesses, including startups?
  • Do you understand all of the fees that they have for each business type?
  • Do you understand your contract and your referral’s contracts?
  • Most Importantly: Would you be comfortable using this company for your own business?

If you are interested in learning more about being a merchant account agent or would like info on the program that my company offers, please check out The Merchant Store’s Merchant Account Agent and Referral Program.

February 28th, 2006 by Jamie Estep

Convert an Omni 3740 or 3750 for Ethernet Processing

Filed in: Credit Card Equipment, Guides | 18 comments

The Verifone Omni 3740 and 3750 credit card terminals are compatible with an Ethernet processing module, which will enable them to process over an IP based connection. The Ethernet module is available in an Ethernet only, and a dual comm version, which includes a phone connection and the Ethernet connection. I highly recommend the dual comm version of the module over the Ethernet only module.

The Ethernet processing module is a small electronic adapter that replaces the land-line module that comes standard with Omni credit card machines.

This is a simple instruction on how to convert your Omni to the Ethernet compatible version.

What you will need:
Compatible IP enabled processing service
Small Philip’s Screw Driver
Omni 3740 or 3750
Omni Ethernet or Dual Comm Module
An IP based connection for processing (broadband internet, VOIP, LAN, etc.)

First make sure the terminal is completely unplugged, and make sure you do not have any transactions on the terminal. If you have transactions that are not batched sitting on your terminal, you will probably lose them. Make sure you are batched out.

  1. The processing module in your machine is located on the bottom rear of the terminal. It is held in place by a single screw which can be removed by a small Philip’s screwdriver.
  2. Once the screw is removed, the module can be slid backwards and removed from the terminal. Be careful not to touch the medal contacts, as this may damage the module.
  3. Once the old module is removed, the new Ethernet or dual comm module can be inserted into the terminal, exactly as the old module was removed. Carefully push the new module into the terminal. Again, make sure you do not touch the metal contacts to avoid damaging the module.
  4. Once the new module is fully inserted into the terminal, replace the screw that was removed in step 1.
  5. Your terminal will now need to be re-programmed in order to operate. You will need to call your provider and they can normally do this over the phone. Hopefully everything will work smoothly the first time and you should now be able to process over an IP based connection.

Disclaimer: This guide was written as I swapped out a module in an Omni 3750, so it is accurate to the best of my writing ability. Regardless of that fact, this guide is meant as a reference only. I make no guarantee of the accuracy of this guide, and I am not responsible in any way for anyone messing up their terminal as a result of following this. Credit card terminals are complex and expensive equipment, so if you are unsure of your own ability to perform the swap, I suggest you get help from a qualified individual or your processing company.

February 28th, 2006 by Jamie Estep


Filed in: Industry News |

This is a great article about another type of rapidly growing fraud method. This method is something completely new to me, but business stand to lose the most from this type of fraud.

“Online criminals are having a harder and harder time tricking Web sites into shipping items purchased with stolen credit cards. So the bad guys are getting consumers to do their dirty work. By routing stolen packages through innocent consumers in inventive ways, criminals have sometimes been able to gain the upper hand in the cat and mouse game against fraud fighters inside electronic commerce firms.”

February 20th, 2006 by Jamie Estep

Simple Merchant Account Fee Calculator

Filed in: Ecommerce, Merchant Accounts, Tools |

Would you like to have an idea of how much accepting credit cards should cost you.

Fill out the merchant account fee calculator to get a basic idea on how much you should expect to pay each month for processing credit cards.

Merchant Account Fee Calculator